SJ Logisitics- Dark Horse

[Vivek_Chadha]

Company Analysis

S J Logistics- premier international logistics service provider, provides the services including freight forwarding, transportation, warehousing, Non-Vessel Operating Common Carrier & customs clearance.

TTMPE- 28

Market Cap-500
TTM PAT=7.6/4 (march23) + 9.3 (Sept)+ 6.2 (Dec) =17.4

TTM PE- 500/17.4 = 28.8

Services Offered-

FCL Shipping
Project Cargo
Warehousing
Non-Vessel Operating Common Carrier
Inland Transportation
Door Delivery
Customs House Agent (Across borders)
Air Freight
LCL (less than a container load and describes sea shipping for cargo loads not large)

Major Focus on Project Cargo-The project cargos they have transported majorly includes earth moving equipment, transmission towers, ODC & break-bulk cargo and also undertake ODC (Over Dimension Cargo) which is out-gauge cargo that requires special handling, low bed trailer transportation

Red Sea Issue already brings up the container prices, its good for them.

Major Clients-

Skipper- (Solid growth in numbers, FYI)
SW Solar
Areva T&D
Transrail
Sterlite and etc

Company does repayment of loan amount and looking for expansion plans.

Recent Results- Solid Numbers are posted as 1 year PAT is achieved in 1 quarter…

Recently got order worth 70 cr

Key Risk Factors—

Breakdown, mishaps or accidents could result in a loss or slowdown in operations

They don’t have Custom House Agent license.

Their logistic and freight business is largely dependent on export of yarn and yarn commodities

DYDD, Study at your own in depth.

[rohitahuja]

SJ Logistics got two order worth Rs.78cr to be executed within 9-10 months. Good to see getting order in Project Cargo which is a high margin segment for them.

[kdjolly]

Compiled some notes, i should have posted it here, my mistake.

The SME portfolio

Compiled a short note, Enjoy, [image] Navigating Global Trade, Unlocking Infinite Possibilities. 01/10/2024 Listed on NSE Emerge, Lot Size 500, will change to 250 on 1st November COMPANY OVERVIEW: • 2 decade old Company providing Logistics and Supply Chain solutions across South America, Europe, Gulf & South East Asia. It has two wholly-owned subsidiaries i.e. SJA Logisol India Private Limited and S.J.L. Group Singapore Pte Ltd. • Key services include: Project Cargo, Ocean & Air Freight…

[abi]

Great work…
Any idea why we are not seeing the 80cr allocation in sept balance sheet?

What do you think of market size and growth rates for project segment?

[kdjolly]

[Mohit_baid]

https://nsearchives.nseindia.com/corporate/SJLOGISTICS_01042025153042_DisclosureofAcquisition.pdf

Disclosure - Invested

[manitmittal]

Hi Everyone,
I have been tracking this name for some time now, and the company has been posting excellent numbers every quarter, and this is also a good thing that despite being an SME they choose to publish the results every quarter. The management is very experienced in this business and is delivering what they have projected. They are growing topline at a healthy 25-30% rate, but then they are also working on expanding the margins, by entering into high margin verticals. Latest quarter’s numbers are a testament to that. They have been able to significantly improve their margins along with a modest topline growth. I am not able to find any significant flaws with the company or their business model, yet the market doesn’t seem to be accounting any positive factor and is continuously thrashing this stock. I would like to understand from fellow investors here, that if there’s any red flag that I am missing, either related to this industry as a whole or this particular company.

[Garuna]

Hi, perhaps the answer lies in their cash flow… ballooning receivables and working capital constraints.

During the bull run, markets ignored such things as long as revenue and profit kept pace, but now it seems that the companies with messy cash flows are being beaten down.

Having working capital constraints can be normal for a company in a growth phase, or it can be a risk. Currently, markets seem to be risk averse.

[manitmittal]

I agree, the CFOs have been poor, and that’s problematic. I did ask this to the management in a conference call, and their answer was that they work on a revolving credit model with repeat customers. But I know that’s a very risky business model, and combined with that the debt is also high.

But Q1 results only provide earnings numbers, neither cashflows nor debt is reported in Q1 numbers, so I don’t understand why did market react to the Q1 results in such a way.

[Bhargab_phukan]

true their receivables are high, but on concall they said the dues are recovered within 30-45 days as they are from repeated recurring customers. Co. also holds the entire value of the cargo on behalf of their clients , which constraints their cashflow , but it also a risk averse strategy on their operation from the risk of client side default on payments. As long as the cargos are essential to counter party, they will highly likely pay for it. The newly leased warehouse also reduces some flexibility on cashflow behalf, but on the flipside it eliminates any third party handlers and thus reducing trans shipment times , which in turn increases per TEU container revenue further from let’s say 2.5 lacs a piece to maybe 2.8-3.1 lacs a piece.
This is a very unique model in any of their domain as to hold the entire value of the cargo, nobody does that on their domain.

[manitmittal]

A bulk order for SJ logistics after a long time. Majority of their business comes from customers that transact with them on a regular basis without any long term contract. Recently they have tied up with these T&D Players to take project cargo contracts, they have better margins in these and a visible topline. Their aspiration is to grow the project cargo business significantly over the next quarters to be able to have a stable topline.

[Mohit_baid]

Is anybody aware of what’s happening in this counter?

[manitmittal]

Don’t know but whatever is happening doesn’t seem very right. They do have some issues with their receivables, but with such growth trading at a single digit P/E doesn’t make much sense. Maybe market is discounting something that we aren’t aware of, because even the closes peer Tiger Logistics is trading at twice the P/E of SJ Logistics.

If someone can connect with the IR team of SJ Logistics, they should get some clarification as to what they think is causing this constant erosion of share price.

[arunkuralla]

Promoters are not selling their unlocked shares which is good. Also, they are already eligible for NSE mainboard in end of 2026, as they have sufficient revenue . And they have recently started their own Vessel Charter which carries goods from Mumbai to Gulf and further to North Africa. And they have plans to expand. I would wait for six months to understand their execution capabilities in their new business.

Note: Invested and biased

[gaurav]

I think the issue is cash. They have none left and need to raise it again. How long will this sustain?

Disc: not invested

[Prince_AI]

Sentiment in the counter has changed post results and earnings call.

However, good to have both sides of views.

D: Invested

[Chandan_Sharma]

Do you all find management’s commentary on the receivables justified ?
Are we missing something that the market might be discounting or the cheapness is because of lack of entusiam towards the shipping sector?